- Gold markets have rallied to close out the week on Friday as we continue to trade in a channel.
- This channel is currently intersecting the $1800 level, an area that has been important more than once in the past.
- Because of this, I suspect that we have a situation where the market is going to continue to try to grind higher, even though looks like we might get a little bit of a turnaround in the US dollar in some currency pairs.
While most people are aware of the negative correlation between the US dollar and gold, the reality is that they can move in the same direction. The 1980s saw that for years. The economic situation that we are in right now is very similar to that, so gold may be thought of as an anti-US dollar play. Because of this, I think you got a situation where both the US dollar and Ingold will continue to rise into 2023, but I also recognize that this week will be very thin.
I Don’t Have Any Interest in Shorting Gold
After all, most people who have a lot of money don’t like to play in the markets between major holidays. There just won’t be enough volume, so what I’m hoping for is that some type of announcement or illiquid event happens, and gold gets crushed. It’s at that point I’ll be looking to buy it.
If we do fall from here, we could drop all the way down to the $1700 level again. On the other hand, if we were to turn around and take out the highest that we made earlier last week, then it opens the possibility of a move to the $1875 level., Which of course will attract a certain amount of attention. Underneath that, the 50-Day EMA is starting to cross that area, creating the “golden cross” indicator that a lot of longer-term traders have seen the light of. It typically happens far too late to be useful, but it is something to be aware of. In this environment, I’m looking for value and I certainly don’t have any interest in shorting gold as it has been such a great performer. Yes, I see the “rising wage”, but that would only lead to a pullback near the $1730 level.
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